A 10% increase in alcohol prices can lead to a 5% decrease in consumption
Nov. 10, 2025 (New York)—Alcohol consumption is a major determinant of ill health, burdens health systems and costs economies billions. When excise taxes on alcohol are designed well, and set high enough to raise retail prices substantially, consumption decreases, lives are saved and government revenues can expand. Today, Economics for Health at Johns Hopkins Bloomberg School of Public Health, as part of the RESET Alcohol initiative led by Vital Strategies, released “Principles of Alcohol Taxation,” a policy note for governments that outlines six key principles for the design and implementation of effective alcohol excise taxes.
“When designed to reduce affordability, alcohol taxes are among the most effective tools to reduce consumption,” said Jeff Drope, Research Professor and Director of the Economics for Health research team. “Many governments want to reform their alcohol excise taxes, and they often ask for expert counsel on how to do this best. Today, we’re proud to launch this policy note—a powerful tool that outlines the most up-to-date information on how alcohol taxation should be designed to address alcohol harms.”
The policy note outlines six core principles governments should follow to design alcohol taxes that protect public health:
- Tax Ethanol: Because consumption of alcohol (ethanol) is the direct cause of health and social harms, a specific excise tax based on the amount of ethanol in any given alcohol product is the best starting point.
- Ensure Consistency: Tax authorities should strive for consistency in how alcohol taxes are applied, regardless of the type of beverage.
- Increase Prices Regularly: Governments should implement substantial and regular increases in alcohol excise taxes to consistently push prices up, make alcohol less affordable and drive alcohol consumption down.
- Target Retail Prices: If and when an ad valorem tax (tax based on product value) is used, it should be applied as closely as feasible to the retail price to have the greatest impact on the price paid by the consumer and to prevent industry manipulation.
- Use a Minimum Tax: In cases where there is an ad valorem–only excise tax, governments should also use a minimum tax that is updated annually for inflation and real income growth.
- Cover Low-Alcohol Products: For no- and low-alcohol products, the same structural recommendations generally apply (for example, specific tax on alcohol volume) but other policy measures are likely to be needed, such as stronger marketing restrictions.
“Globally, alcohol consumption causes 2.6 million deaths each year—and it contributes to a vast array of harms like cancer, heart and liver disease, mental health illnesses, personal and community violence, and road crashes,” said Jacqui Drope, Managing Director of the RESET Alcohol initiative. “Yet, in most countries, alcohol products remain too affordable, accessible and relentlessly marketed. “Principles of Alcohol Taxation” provides clear guidance on how to implement alcohol excise taxes that generate the best public health and fiscal outcomes.”
Access the “Principles of Alcohol Taxation”here: https://www.vitalstrategies.org/resources/principles-of-alcohol-taxation/
“Principles of Alcohol Taxation” is the product of a two-day technical meeting on alcohol excise tax policy held in Mexico City, May 5–6, 2025 supported by the RESET Alcohol initiative and hosted by the Economics for Health team at the Johns Hopkins Bloomberg School of Public Health. Participants included over 25 experts specializing in health tax policy development and implementation from a wide range of organizations, including universities, intergovernmental organizations and civil society.
About Vital Strategies
Vital Strategies is a global health organization that believes every person should be protected by an equitable and effective public health system. We work with governments, communities and organizations around the world to reimagine public health so that health is supported in all the places we live, work and play. The result is millions of people living longer, healthier lives.
To find out more, please visit www.vitalstrategies.org or follow us on LinkedIn.
About Economics for Health
Based at the Johns Hopkins Bloomberg School of Public Health in the Department of Health, Behavior and Society, Economics for Health conducts economic research to demonstrate the effects of existing policies and chart pathways to new ones that promote healthier populations and more robust and equal economies. Their approach emphasizes collaboration among economists, health experts, key stakeholders, and decision-makers. Fiscal policies are pivotal drivers of everything, from the decision to smoke and consume alcohol, to food choices, and to environmental factors. In its work, Economics for Health supports researchers in low- and middle-income countries to build a local evidence base for effective economic policies like tax that can engender both improved public health and economic prosperity.
About RESET Alcohol
RESET Alcohol is a global initiative that brings together national governments, civil society, researchers, and leaders in public health and alcohol policy to implement the World Health Organization’s SAFER best buys for alcohol policy with a focus on increasing taxation, and targeted efforts to restrict marketing and availability. The initiative is led by Vital Strategies in collaboration with national partners in countries where RESET operates and global technical partners that include the World Health Organization, Johns Hopkins Bloomberg School of Public Health Economics for Health team, Global Alcohol Policy Alliance (GAPA), and Movendi International.